That includes phasing out asset purchases by the end of the year and gradually moving interest higher beginning at some point in 2015.

“There are many good reasons why we should see a period of sustained growth,” Yellen said during a press conference Wednesday, while cautioning against setting any future policy shifts in stone.

Yellen was echoing the mixed tone of a Fed policy statement released earlier Wednesday at the conclusion of a two-day meeting of the Federal Open Markets Committee.

FOMC members, citing the ongoing economic recovery, projected a slightly faster trajectory for long-term interest rate hikes. At the same time, the FOMC slashed its growth projections for 2014.

Despite cutting its 2014 growth projection from around 2.9% to a range of between 2.1 and 2.3%, the central bank continued the gradual phasing out of its monthly bond purchasing program. The Fed reduced its monthly asset purchases from $45 billion to $35 billion a month, divided between $20 billion of Treasury securities and $15 billion of mortgage-backed debt.

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“Economic activity will expand at a moderate pace and labor market conditions will continue to improve gradually,” the Fed said in its policy statement. “Household spending appears to be rising moderately and business fixed investment resumed its advance.”

In updated interest rate projections, Fed officials once again predicted rates starting to move higher next year. Of 16 individual rate hike projections, the median interest rate stood at 1% by the end of 2015, the same as was predicted in March.

But Fed policy makers projected a quicker trajectory of interest rate hikes for 2016, with the median placed at 2.5% compared with 2.25% in March.

The more aggressive forecast for interest rate hikes had been predicted by economists ahead of this week’s FOMC meeting, primarily due to a gradually strengthening U.S. labor market.

Yellen, during the press conference, said inflation is still running well below the Fed’s target rate of 2%, despite recent data suggesting food and energy prices are shooting higher. And Yellen said stock prices are well within historical norms.

Runaway inflation and asset bubbles are two concerns that have been repeatedly raised by critics of the Fed’s long-running easy-money policies.

Inflation hawks -- including some members of the FOMC -- believe if interest rates remain too low for too long, it will push prices higher and could lead to excessive risk taking in securities markets.

Yellen was pointedly vague about the precise timing of raising interest rates, clearly an effort to avoid a gaffe made during her first press conference in March when she said rates could start moving higher six months after asset purchases ended.

She reiterated the Fed’s position that interest rates will remain low for a “considerable” period after asset purchases end and that the hike “will not hinge on any one or two indicators” but instead on an array of economic data.

The Fed cut overnight rates to near zero in December 2008 as it battled the financial crisis and deep recession. The timing and pace of renewed rate increases is one of the key decisions facing the central bank as the current recovery evolves.

In its updated quarterly forecasts, the Fed took into account the sour start the economy got this year after severe winter weather crippled activity in major cities around the country. The government said last month that GDP shrank at a 1 percent annual rate, and economists say data since then imply a much deeper contraction.

Although growth now appears to be rebounding, there remain weak spots, particularly in the housing sector. Fed officials described risks to the economy and labor market as "nearly balanced."